The top 1 percent had a very good year

The top 1 percent of American income earners came bouncing back from the recession in great shape.  About 93 percent of the nation’s 2010 income gains flowed to them.

There are two ways of interpreting this.  One is that the 1 percent are Ayn Rand heroes who all by themselves generated 93 percent of the nation’s gains in wealth over 2009.  My interpretation is that the system is flawed.

Notice that most of the gains of the upper 1 percent were in the form of capital gains, which is taxed at a 15 percent rate, in contrast to taxes on earned income, which is taxed at rates starting at 10 percent and rising in increments to 35 percent.  What this means is that although the income of the middle class is taxed at a higher rate than the income of the poor, and the income of the affluent at a higher rate than the middle class, the income of the ultra-rich is taxed at a lower rate than the income of the middle class.

Click on The 1% Had a Fantastic 2010 for Mike Konczal’s comment on the Rortybomb web log (and a hat tip to Konczal for the chart).

Click on The One Percent Bounce Back for Timothy Noah’s comment in The New Republic.

Click on The World’s Top Incomes Data Base created by Facundo Alvarado, Tony Atkinson, Thomas Piketty and Emmanuel Saez for the Paris School of Economics Center for Equitable Growth.

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